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Educational Mismatches and Earnings: Extensions of Occupational Mobility Theory and Evidence of Human Capital Depreciation

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  • Stephen Rubb

Abstract

Using a human capital theory framework, this study examines the impact of educational mismatches on earnings and occupational mobility. Occupational mobility theory suggests that overeducated workers observe greater upward occupational mobility and undereducated workers observe lower upward occupational mobility. By extension, this leads to relatively high earnings growth for overeducated workers and relatively low earnings growth for undereducated workers. Moreover, overeducated workers are probably transient relative to their undereducated counterparts, so employers have few incentives to invest in their human capital. Accordingly, their experience will be rewarded at lower rates. These results may also occur if the unused human capital of overeducated workers depreciates with nonuse. The data verify these predictions. Insights on the link between experience and educational mismatches are also examined.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Education Economics.

Volume (Year): 14 (2006)
Issue (Month): 2 ()
Pages: 135-154

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Handle: RePEc:taf:edecon:v:14:y:2006:i:2:p:135-154

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Related research

Keywords: Human capital; overeducation; occupational mobility;

References

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  1. Albrecht, James W. & Edin, Per-Anders & Sundström, Marianne & Vroman, Susan B., 1996. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Working Paper Series 1996:23, Uppsala University, Department of Economics.
  2. Robst, John, 1995. "College quality and overeducation," Economics of Education Review, Elsevier, vol. 14(3), pages 221-228, September.
  3. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-52, July.
  4. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
  5. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
  6. Tsang, Mun C. & Levin, Henry M., 1985. "The economics of overeducation," Economics of Education Review, Elsevier, vol. 4(2), pages 93-104, April.
  7. Sicherman, Nachum & Galor, Oded, 1990. "A Theory of Career Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 169-92, February.
  8. Alfonso Alba-Ramírez, 1993. "Mismatch in the Spanish Labor Market: Overeducation?," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 259-278.
  9. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
  10. van Smoorenburg, M. S. M. & van der Velden, R. K. W., 2000. "The training of school-leavers: Complementarity or substitution?," Economics of Education Review, Elsevier, vol. 19(2), pages 207-217, April.
  11. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S76-S108, Part II, .
  12. Michael Quinn & Stephen Rubb, 2005. "The importance of education-occupation matching in migration decisions," Demography, Springer, vol. 42(1), pages 153-167, February.
  13. Rubb, S., 2003. "Overeducation in the labor market: a comment and re-analysis of a meta-analysis," Economics of Education Review, Elsevier, vol. 22(6), pages 621-629, December.
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Cited by:
  1. Baert, Stijn & Cockx, Bart & Verhaest, Dieter, 2012. "Overeducation at the Start of the Career: Stepping Stone or Trap?," IZA Discussion Papers 6562, Institute for the Study of Labor (IZA).
  2. Saxena, Richa & Bhatnagar, Deepti, . "Soaring on wings of aspiration and support: A study of married Indian women professionals staying away from families to pursue higher studies," IIMA Working Papers WP2013-10-04, Indian Institute of Management Ahmedabad, Research and Publication Department.
  3. repec:ese:iserwp:2013-11 is not listed on IDEAS
  4. Peter Galasi, 2008. "The effect of educational mismatch on wages for 25 countries," Budapest Working Papers on the Labour Market 0808, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  5. Galasi, Péter, 2009. "A túl- és az alulképzés bérhozama 25 európai országban
    [Returns for over-education and under-education for 25 European countries]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 197-215.
  6. Michael Quinn & Stephen Rubb, 2011. "Spouse Overeducation and Family Migration: Evidence from the US," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 36-45, March.

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